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CVS chief executive's prescription for growth

With the purchase of Eckerd Corp. for $2.15 billion this year, Tom Ryan transformed Rhode Island's CVS Corp. into a national force with more than 5,000 drugstores. Ryan began working at CVS as a pharmacist in Warwick, R.I., in 1978. Now, as chief executive, he is engineering the integration of 1,260 Eckerd stores. He spoke recently with Globe reporter Christopher Rowland at the chain's Woonsocket headquarters.

Q: How is the Eckerd acquisition going? You've only changed the names on about 200 Eckerd stores.

A: We're putting an average of $300,000 into every Eckerd store on fixtures and signage. Eighty percent of the stores are in Texas and Florida. Despite the fact that we had four hurricanes, it's just going tremendously. We are on schedule. We have trained over 40,000 people.

Now the plan is to go in market by market, begin to change the look of the store to represent the CVS brand. We're going to lower the shelves. We're going to widen the aisles. We're lowering prices on 5,000 items. And then the proverbial CVS carpeting will be put down. At that point, once that's all done and colleagues in the stores all trained in the CVS way, then we put the name on the door.

Q: Do you want to add more stores and grow even larger?

A: We'll continue to grow. We'll open up 250 to 300 stores a year. Half of those stores will be new stores, and roughly 70 percent of that will be in new markets. We just did Eckerd, but we also opened up stores in Minnesota and Southern California.

Q: So who's bigger now: Walgreens or CVS?

A: We have more stores, and we do more pharmacy business. In total sales, they might be slightly larger. People keep asking me: How do you feel about being the biggest? We don't spend a lot of time worrying about it. Honestly, the pure and simple answer is that customers don't care. The customer cares when they walk into a store in Brockton: How's my service? How's my shopping experience? Is it in stock?

Q: Is the mail-order drug business going to be a growing part of CVS?

A: There are some consumers who want it through mail, there are some who want it at the retail store. If you ask consumers in research, if given the choice, if they can get 90 [days' supply] at the store or 90 days in the mail, they'd rather get it in the store. Because they don't have to think about it ahead of time, they can just run right down and get it. Fifty percent of the population in our markets lives within 2 miles of a CVS.

Q: How is the Medicare prescription benefit going to change your business?

A: Right now, it's confusing to the seniors. We have a CVS discount card that provides a discount from 15 to 40 percent off the prescriptions. We also accept 36 other cards. It will be good for CVS, because any time you have coverage, people use pharmaceuticals. They work. It's when they can't afford it, it's when they don't have the coverage, they stop using pharmaceuticals, and they spend more time in the hospital.

Q: People who don't have health insurance pay the highest prices, including for pharmaceuticals. Is there a way to fix that?

A: You have to look at the uninsured population -- there are 42 million, roughly. A country of our size, and our wealth, should not have that many uninsured Americans. Pfizer and Novartis have programs for the low-income where you can get drugs free of charge or at nominal cost. The question is, can we take it to the uninsured? I certainly don't have the answer, but it shouldn't be addressed on the back of corporate America.

Q: One of the solutions, which you've testified publicly about, is allowing prescription drug imports. Why?

A: Customers were coming into our stores, obviously complaining about the prices of prescriptions, and saying they could get prescriptions cheaper in Canada. But it was unregulated, they were playing Russian roulette with prescriptions. So we were concerned about the safety issue.

As long as you have these arbitrary, huge discrepancies between prices of prescriptions in various countries, you're going to have imports. Individuals can actually buy drugs cheaper from some countries than CVS can buy, and we're the largest purchaser of pharmaceuticals in the world.

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